The European Bank for Reconstruction and Development is set to raise its stake in Russia’s Transcapitalbank to up to 28.6 percent after signing an agreement today to subscribe to a new issue of ordinary shares by the end of 2009 aimed at boosting its Tier-1 capital.
The transaction, through which this mid-sized bank is raising over 1.2 billion roubles ($43 million equivalent) from its existing shareholders, will both strengthen its capital base and enhance its competitive position at a time when the country faces an economic downturn.
Transcapitalbank focuses on medium-sized corporates, as well as micro and small businesses, across the regions of Russia, and the new funding will allow this long-standing partner of the EBRD to increase its support for its core client base in the real sector of the economy.
The EBRD originally acquired a stake of 25 percent plus one share in Transcapitalbank at the end of 2006 and then participated pro-rata in a capital increase in September 2008.
This new transaction will bring to $166 million the total amount of facilities provided by the EBRD to Transcapitalbank since 2004. EBRD funding over the past five years has included subordinated debt, credit lines for micro, small and medium-sized businesses, trade finance facilities, mortgage lending and equity capital.